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Settlement Agreements

At TLS Solicitors we try to keep things simple.

Here we provide a brief definition of what a settlement agreement is and what we can do for both employers and employees when requiring legal representation.

What is a Settlement agreement?

A settlement agreement is a document that records an agreement between an employer and an employee. It is a legally binding settlement. The employee normally agrees not to pursue future employment claims against the employer (such as unfair dismissal, discrimination claims, redundancy claims), and the employer normally agrees to pay the employee a certain amount of money in return. In this way the employees’ rights are said to be “compromised”.

Settlement agreements are seen as a good way to make a ‘clean break’ by employers. They offer peace of mind that an employee leaving the business will not be pursuing claims against them later on.

Settlement agreements are also of benefit to employees as the termination payment is usually paid tax free up to the first £30,000.

For Employees

A settlement agreement is a legally binding agreement between an employer and an employee.

The employee normally agrees not to pursue action such as unfair dismissal, discrimination or redundancy claims against the employer. In return, the employer normally agrees to pay the employee a sum of money to compensate for their ‘compromised’ rights.

Settlement agreements can be a good way for employers way to make a clean break with an employee. This is because they provide an assurance that the departing employee won’t pursue claims against them later on.

A settlement agreement could also benefit you as the first £30,000 of the termination payment is usually tax free.

Negotiating your settlement agreement

To be legally binding, any settlement agreement you enter into needs to conform to certain requirements.

At TLS Solicitors, we can review your settlement agreement and negotiate better terms on your behalf. We’re experienced in dealing with small businesses and large multi-national organisations and we’ll be 100 per cent on your side.


Your employer is not legally obliged to give you a reference. However, you’ll probably be as concerned about your professional reputation as you are about your financial settlement.

We can write a reference on your behalf for your employer to agree and provide as an annex to your settlement agreement. This means any reference your employer provides about you will be the one you’ve seen and agreed.

With our efficient service and unrivalled negotiating skills, we’ll take the entire burden of your settlement agreement off your hands.

For Employers

Disruption at work can be distressing, both financially and emotionally.

At TLS Solicitors, we have a dedicated and experienced team that realises this and is ready to help.

We also understand you’ll be concerned about the costs of taking legal advice during this time of uncertainty. So, we’ll put you in control of your legal fees.

We can act on a fixed fee, retainer or capped hourly rate basis. Alternatively, if our initial review of your case is positive, we can act on a conditional (partial no win no fee) basis, sharing the risk with you.

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